The Shareholder Forum


The Bear Stearns Companies, Inc.

Forum Home Page


Bear Stearns Forum Home Page

Program Reference


For the JPMorgan Chase disclosure of the shareholder litigation development reported below, see

Note: Daniel W. Krasner of Wolf Haldenstein Adler Freeman & Herz, the attorney quoted in the article as a spokesperson for the various firms representing a purported class of Bear Stearns shareholders, had agreed to report on the case and respond to questions at the Forum's previously announced May 14, 2008 open meeting


Reuters, May 7, 2008 article



Bear Stearns investors drop bid to block buyout

Wed May 7, 2008 2:08pm EDT

By Martha Graybow

NEW YORK (Reuters) - Bear Stearns Cos Inc (BSC.N: Quote, Profile, Research) shareholders suing over the planned JPMorgan Chase & Co. (JPM.N: Quote, Profile, Research) takeover are dropping efforts to block the deal but will seek damages of at least $2.8 billion, an attorney for the plaintiffs said on Wednesday.

Investors have withdrawn a motion in New York State Supreme Court for a preliminary injunction aimed at halting the deal, said Daniel Krasner, a senior partner at law firm Wolf Haldenstein Adler Freeman & Herz LLP. A hearing on that request had been scheduled for Thursday.

But Krasner said the shareholder case would continue, with investors seeking damage claims. JPMorgan is offering $10 a share for Bear stock, which Krasner said is much too low. The shares should be valued at a minimum of $30 each, he said.

"We think it's in the best interests of the Bear stockholders to let the transaction proceed and sue for damages," Krasner told Reuters. "We think that monetary recovery is all that is really available to the Bear stockholders at the end of the day."

There is now little in the way of legal challenges standing in the way of JPMorgan completing the planned buyout of the troubled investment bank, which was first announced in March. Bear Stearns shareholders are set to vote on the deal on May 29.

Krasner, one of several lawyers representing the plaintiffs, said that the attorneys decided to change their strategy after considering all of the facts in the case.

It now "is inevitable that JPMorgan is going to acquire Bear -- the only question is what is a fair price," he said. "The lawsuit will continue as a damage claim. We believe that we are entitled to a jury trial on that."

A Bear Stearns spokesman was not immediately available for comment.

The preliminary injunction request had sought to prevent JPMorgan from voting its newly acquired stake of 39.5 percent of Bear Stearns shares. A pretrial conference will be held on Thursday instead, according to a copy of a letter sent by Krasner to New York State Supreme Court Justice Herman Cahn, who is overseeing the case.

The lawsuit was brought by investors including the Louisiana Municipal Police Employees' Retirement System and other pension funds. They accuse Bear's board of directors of violating its fiduciary duties to shareholders in agreeing to the JPMorgan deal, saying the terms are unfair and precluded any other bidders from emerging.

JPMorgan initially agreed to buy Bear Stearns for $2 a share as the investment bank verged on collapse amid concern that the company did not have enough capital to keep going. The offer was later raised to $10 a share.

A separate shareholder lawsuit in Delaware Chancery Court was put on hold in April, with the judge in that case citing the parallel litigation in New York. Plaintiffs' lawyers in both cases are now working together on the New York lawsuit.

Bear shares were down 46 cents, or 4.2 percent, at $10.38 in afternoon trading on the New York Stock Exchange. JPMorgan stock was down 91 cents, or 1.9 percent, at $47.29, also on the NYSE.

(Reporting by Martha Graybow; Editing by Jeffrey Benkoe and Dave Zimmerman)


Thomson Reuters 2008. All rights reserved. Users may download and print extracts of content from this website for their own personal and non-commercial use only. Republication or redistribution of Thomson Reuters content, including by framing or similar means, is expressly prohibited without the prior written consent of Thomson Reuters. Thomson Reuters and its logo are registered trademarks or trademarks of the Thomson Reuters group of companies around the world. Thomson Reuters journalists are subject to an Editorial Handbook which requires fair presentation and disclosure of relevant interests.





This Forum program is open, free of charge, to all shareholders of The Bear Stearns Companies, Inc. ("BSC") and to any fiduciaries or professionals concerned with their investment decisions.  Its purpose is to provide shareholders with access to information and a free exchange of views on issues relating to their evaluations of alternatives, addressing issues described in the Forum Summary.

As stated in the posted Conditions of Participation, all Forum participants are expected to make independent use of information obtained through the Forum, subject to the privacy rights of other participants.  It is a Forum rule that participants will not be identified or quoted without their explicit permission.

Inquiries and requests to be included in the Forum's distribution list may be addressed to

The information provided to Forum participants is intended for their private reference, and permission has not been granted for the republishing of any copyrighted material. The material presented on this web site is the responsibility of Gary Lutin, as chairman of the Shareholder Forum.